S. 32 : Depreciation-Asset purchased from and leased back-Entitle depreciation-Assessment-Direction of the Tribunal to follow the Judgement of Special Bench-While giving effect High Court decided contrary to the Judgement of Special Bench-Assessing Officer is bound to follow the order of High Court -Asset purchased from and leased back -Entitle depreciation-Business expenditure-Amount paid fees paid to ITC Classic Finance Ltd has direct nexus with acquisition of the machinery from RSEB-Allowable as deduction. [S. 50, 143(3), 254(1)]
Tribunal set aside the matter to the Assessing Officer and directed to follow the Special Bench in case Mid East Folio Management v .DCIT (2003) 87 ITD 537 (Mum.)(SB)(Trib.). In the set aside proceedings the assessee relied on the judgement of Orissa High Court in Industrial development of Orissa Ltd v .CIT (2004) 268 ITR 130 (Orissa) (HC). The Assessing Officer disregarded the order of High Court and preferred to follow the Judgement of Special Bench. Order of Assessing Officer is affirmed by the CIT (A). On appeal the Tribunal held that the Assessing Officer ought to have followed the Judgement of Orissa High Court. Tribunal held that West Cost Paper Mills Ltd. v. JCIT ITA No. 5403/B 99 dt. 21-6-2005 which was affirmed by the High Court in case of CIT v. Apollo Finvest (I) Ltd. (2016) 382 ITR 33 (Bom.)(HC). Amount paid fees paid to ITC Classic Finance Ltd has direct nexus with acquisition of the machinery from RSEB-Allowable as deduction. [ITA No. 5986 & 5987/M/2006 dt. 27-5-2022. (AY. 1995 -96, 1996-97)]
Star Chemicals (Bom.) Pvt. Ltd. v. Dy. CIT (Mum.)(Trib.) www.itatonline.org
[Coram : Hon’ble Shri Kuldip Singh, JM and Hon’ble Shri Gagan Goyal, AM]